PORTLAND — As the school system braces for an anticipated $10 million reduction in state aid over the next two years, Portland officials will have to decide how much the city should share the school system's pain.
The City Council has several options for cushioning the impact of the revenue losses on schools, including cutting city services, raising taxes or tapping into the city's fund balance. The latter could hurt the city's bond rating and raise borrowing costs.
City Manager Joe Gray has already met with union leaders to discuss the fiscal 2011 budget. Monday, he met with department heads. Gray said he and Superintendent Jim Morse will be working closely over the next several months as the two prepare their budgets.
"At the end of the day, we will come up with a budget responsive to taxpayers," he said.
Although the budget season doesn't officially start until January, discussions will begin next week after Morse gives the School Committee his plan for finding nearly $3 million in savings in the current budget, said School Committee Chairman Peter Eglinton. He said the plan probably also will have ramifications for the fiscal 2011 budget, which begins July 1.
State aid covers nearly $15 million of Portland schools' $91.3 million annual budget. The threat of a midyear loss of nearly $3 million raises the possibility that school employees could be laid off, necessary positions could be left vacant, and sports and other extracurricular activities could be eliminated.
In fiscal 2011, the state is expected to cut funding to Portland again, by as much as $7 million, Eglinton said.
He said the revenue losses are too steep for the school system to handle on its own. He said school officials need to work closely with city officials as they put together their budget.
"It's going to force some hard decisions no matter how we approach it," he said.
"I'd rather collaborate with them from the start rather than make quick decisions in the end that lead to decisions we may regret."
Council Finance Committee Chairman Nicholas Mavodones Jr. agreed that the schools can't absorb all the cuts. He said the city may be able use a portion of its $27 million fund balance, which the council in recent years has been trying to build up to keep the city's bond rating high.
The upcoming budget process will be the worst since the early 1990s, Mavodones said. Over the past two years, the city has already cut services, reduced staff and frozen wages.
Additional savings will be hard to achieve without affecting more core city services, he said.
"I'm not sure there is a lot of trimming to do around the edges," he said.
The council may have to consider major changes in the way the city provides services, such as strategically reducing the number of its firehouses, said Councilor John Anton, who serves on the Finance Committee.
He said it's better to publicly discuss those ideas early in the process.
"If we are talking about big changes, we need the proposals on the table as soon as possible so we can get them in front of the public and get feedback and work through the issues that invariably pop up," he said.
Mayor Jill Duson, however, disagreed, saying public discussions about major changes would create panic among affected employees. She said the city must follow its normal budget process and allow administrators to work with stakeholders before making proposals public.
She agreed, though, that it's going to be a tough year.
"I think there will be pain across the board, and we have to figure out how to survive the reduced resources as a community," she said.
"We are going to have to cut something, probably many things. We will have to share the pain."
Staff Writer Tom Bell can be contacted at 791-6369 or at: tbell@pressherald.com
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